Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of September 23, 2002 between QMED, INC.,
a Delaware corporation (the "Company"), and XXXX XXXXXXX ("Executive").
WHEREAS, the Company wishes to retain the services of the Executive in
the areas of accounting and finance and the Executive is willing to enter the
Company's employ on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, it is agreed between the Company and the
Executive as follows:
1. EMPLOYMENT.
The Company, subject to the approval of this Agreement by the Company's
Board of Directors, hereby employs Executive as its Senior Vice President
Finance and Chief Financial Officer during the term hereof, as hereinafter
described, and Executive hereby accepts such employment.
2. EFFECTIVE DATE.
This Agreement shall commence thirty (30) days after the Company's
Board of Directors approves this Agreement and the options described in Section
5.3 (b), below, have been duly granted and provided for (the "Effective Date").
3. TERM OF EMPLOYMENT.
Unless earlier terminated pursuant to Section 8 hereof, the term of
employment under this Agreement (the "Term") shall be for an "Initial Period"
commencing on the Effective Date through November 30, 2004. This Agreement shall
be automatically renewed beyond the Initial Period, for successive one year
periods from December 1 through November 30 of each year, unless either party
shall notify the other in writing of its intention not to renew this Agreement
("Non-renewal Notice"), which Non-renewal Notice shall be given at least 90 days
prior to the end of the then current term, including the Initial Period.
4. DUTIES.
4.1 During the Term, Executive shall serve as Senior Vice President
Finance and Chief Financial Officer of Company. In Executive's capacity as
Senior Vice President Finance and Chief Financial Officer of the Company, the
Executive shall have the customary powers, responsibilities and authorities of
principal financial officers of corporations of comparable size, type and nature
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of the Company, as it exists from time to time, including primary responsibility
for the financial management of the Company, its accounting and internal audits
and any duties prescribed for such positions in the By-laws of Company as in
effect from time to time, and those responsibilities and duties as the Board of
Directors and Chief Executive Officer ("CEO") may from time to time direct
Executive to undertake and to perform which are consistent and appropriate to
the capacities of senior corporate management held by Executive.
4.2 The Executive, if elected, shall serve as a member of the Board of
Directors of the Company, provided that nothing in this section shall be
construed to require the Executive's nomination or election as such. The
Executive shall, if directed by the Board of Directors or CEO, serve as the
highest ranking financial officer of each of the Company's wholly-owned
subsidiaries. If elected to the Board of Directors, Executive shall be entitled
to such compensation and other benefits for serving as a member of the Board of
Directors as other non-independent members of the Board of Directors receive.
4.3 Executive shall serve the Company faithfully and to the best of his
ability and shall devote all of his time, skill, efforts and attention during
business hours (unless prevented by illness or incapacitation) to the business
affairs of Company.
4.4 As long as the Board of Directors has not reasonably determined
that such activities interfere with his duties and responsibilities hereunder,
nothing in this Agreement shall preclude the Executive from engaging in
charitable and community affairs, from managing any passive investment made by
him in publicly-traded securities or other property. For purposes of this
Agreement, passive investment shall mean the beneficial ownership of not more
than 1% of the voting stock of an entity whose equity securities are traded on a
national securities exchange or Nasdaq. The Executive may serve as a member of
the boards of directors or as a trustee of any other corporation, association or
entity so long as in the reasonable judgment of the Company's Board of
Directors, such activities do not conflict or interfere with his duties
hereunder.
5. COMPENSATION.
For all services to be rendered by the Executive in any capacity during
the Term, including without limitation, services as an executive, officer,
director or member of any committee of the Company, its subsidiaries, joint
ventures, divisions and affiliates, the Executive shall be compensated as
follows:
5.1 Salary. Company shall pay Executive a base salary ("Base Salary")
as follows: Salary at the annual rate of $150,000 for the period commencing on
the Effective Date and ending November 30, 2002. $172,500 per year for the
one-year period commencing December 1, 2002 and ending November 30, 2003.
Thereafter, Executive Base Salary will be fixed by the Executive Evaluation and
Compensation Committee of the Company's Board of Directors (the "Compensation
Committee"). Executive's Base Salary may be increased, but not decreased by the
Board of Directors. Once increased, such increased amount shall constitute the
Executive's Base Salary. Base Salary shall be payable in accordance with the
regular payroll practices of the Company.
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5.2 Compensation Plans and Programs. Executive shall be eligible to
participate in any compensation plan or program, bonus, annual or long term,
maintained by Company in which other senior executives of Company participate on
terms set by the Compensation Committee. Executive shall receive such bonus as
may from time to time be approved by the Compensation Committee. The present
bonus level recommendations which the CEO will make to the Compensation
Committee for fiscal 2003 for Executive will be in a range of 14% to 40% of the
Executive's Base Salary
5.3 Stock Option Awards.
(a) Annual Grants. During the Term, Executive will have an annual
opportunity to be granted an option (the "Annual Option") for
shares of the Company's Common Stock, a target level value of
a percentage of Base Salary established by the Compensation
Committee, based upon the performance goals established by the
Compensation Committee. The determination of the value of the
Annual Options to be granted in the future will be made by the
Compensation Committee using the valuation method it employs
in making annual option grants to senior executives of the
Company.
(b) Initial Grants. The Company's CEO will recommend an initial
grant of 16,000 incentive stock options for Executive
exercisable at the fair market value of the Company's Common
Stock on the date of grant, which shall vest one half on the
first and second anniversary of the date of grant. In
addition, the Company's CEO will recommend an option grant for
Executive of not less than $112,000 face value (number of
options times the per share fair market value of the Company's
Common Stock on the date of grant) to the Compensation
Committee when it meets to address annual option grants to
senior executives at or after the end of fiscal 2003 and such
option will vest over the same three year period as grants to
other senior executives. In the event Executive is terminated
without Cause or Executive terminates this Agreement for Good
Reason (defined below), the Executive dies or becomes
disabled, or the Term expires as a result of a Non-renewal
Notice given to the Executive by the Company (but not if the
Non-renewal Notice is given to the Company by the Executive),
all options granted to Executive shall immediately vest. In
the event Executive is terminated for any other reason, the
Executive shall only be entitled to such options that have
vested prior to the date of termination.
5.4 Withholding. All compensation payments, whether during the Term or
following termination pursuant to Section 8 hereof, shall be subject to such
withholding as is required by applicable law.
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6. BENEFITS.
6.1 Benefit Programs. Executive shall be eligible to participate in all
Executive benefit programs of the Company from time to time in effect and
generally available to the Company's senior executives, including, but not
limited to health (which shall include an annual physical and shall cover the
Executive's dependents), and disability insurance (which policy currently
guarantees up to 60% of Executive's then current Base Salary upon Executive's
occupational or functional disability based upon insurer's examination and risk
assessment).
6.2 Vacation. Executive is entitled to up to three weeks (15 business
days) of paid vacation per each calendar year. Executive shall not utilize his
vacation time in periods of longer than 10 consecutive business days without
obtaining the express consent of the CEO. Unused vacation shall be forfeited as
of December 31 of each calendar year. In addition to paid vacation time, the
Executive will be paid for sick, personal and floating days up to a maximum of
nine days per calendar year.
6.3 Fringe Benefits. Executive shall be entitled to the perquisites and
other fringe benefits made available to senior executives of the Company.
6.4 Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel, cellular telephone (including access
charges and business calls) and similar items related to such duties and
responsibilities. Company will reimburse Executive for all such expenses upon
presentation by Executive of appropriately itemized accounts of such
expenditures.
6.5 Automobile. Company shall pay Executive for all reasonable
expenses, of up to $600 per month incurred in operating an automobile for
Executive's use in the performance of his duties hereunder and in the conduct of
Company's affairs.
7. INDEMNIFICATION.
Executive shall be indemnified by the Company against expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of any action, suit, investigation or proceeding or
similar legal activity, regardless of whether criminal, civil, administrative or
investigative in nature ("Claim"), to which he is made a party or is otherwise
subject to, by reason of his being or having been an officer of Company, to the
full extent permitted by applicable law and the Certificate of Incorporation of
Company. Such right of indemnification will not be deemed exclusive of any other
rights to which Executive may be entitled under Company's Certificate of
Incorporation or By-laws, as in effect from time to time, any agreement or
otherwise.
8. TERMINATION OF EMPLOYMENT.
8.1 Termination Without Cause or for Good Reason.
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(a) Company may terminate Executive's employment at any time for
any reason. If Executive's employment is terminated by the
Company other than for Cause (as defined in Section 8.4
hereof) or as a result of Executive's death or Permanent
Disability (as defined in Section 8.2 hereof) or if Executive
terminates his employment for Good Reason (as defined in
Section 8.1 (b) hereof) prior to the Termination Date,
Executive shall receive or commence receiving as soon as
practicable in accordance with the terms of this Agreement:
(i) such payments under applicable plans or programs,
including but not limited to those referred to in
Section 5.2 hereof, to which he is entitled pursuant
to the terms of such plans or programs through the
date of termination;
(ii) any earned but unpaid bonus which amount shall be
paid at the same time bonuses are paid to other
senior executive officers of the Company for the same
bonus period;
(iii) severance payments (the "Severance Payments"), which
shall equal the Executive's Base Salary for the
remainder of the Initial Period ending November 30,
2004. If such termination occurs after November 30,
2004. the Severance Payments shall equal six months
of Executive's Base Salary as in effect on the date
of such termination. The Severance Payments will be
paid in the same manner and frequency as Base Salary
was paid prior to termination, but no less frequently
than monthly;
(iv) payment in respect of allowed but unused vacation
days (the "Vacation Payment") which amount shall be
paid in a cash lump sum not later than 30 days
following the date of termination;
(v) the health benefit programs referred to in Section
6.1 for the Executive and Executive's dependents for
a period of three (3) months after termination in the
same manner as the other senior executive officers of
the Company.
(b) For purposes of this Agreement, "Good Reason" shall mean any
of the following (without Executive's express prior written
consent):
(i) Any material breach by Company of any provision of
this Agreement, including any material reduction by
Company of Executive's duties or responsibilities
(except in connection with the termination of
Executive's employment for Cause, as a result of
Permanent Disability, as a result of Executive's
death or by Executive other than for Good Reason);
(ii) A reduction by the Company in Executive's Base
Salary; or
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(iii) The failure by the Company to obtain the specific
assumption of this Agreement by any successor or
assign of Company as provided for in Section 11
hereof.
(c) The Company's obligation to make Severance Payments shall be
conditioned upon the Executive's continued compliance with the
provisions of Section 9 hereof, release of the Company from
all liability except for the Severance Payment, his execution
of such documents and certificates reasonably required by the
CEO relating to the Company's financial statements and
disclosure controls during his tenure, and his agreement not
to disparage the Company or any of its officers or directors
following such termination.
8.2 Permanent Disability. If Executive becomes totally and permanently
disabled (as defined in the Company's disability benefit plan applicable to
senior executive officers as in effect on the date thereof) ("Permanent
Disability"), Company or Executive may terminate Executive's employment on
written notice thereof, and Executive shall receive or commence receiving, as
soon as practicable:
(i) amounts payable pursuant to the terms of the
disability insurance policy or similar arrangement
which Company maintains during the Term;
(ii) the Vacation Payment which shall be paid to Executive
as a cash lump sum within 30 days of such
termination;
(iii) such payments under applicable plans or programs, to
which he is entitled pursuant to the terms of such
plans or programs through the date of termination;
and
(iv) the option described in Section 5.3(b) will
immediately vest.
8.3 Death. In the event of Executive's death during the Term,
Executive's estate or designated beneficiaries shall receive or commence
receiving, as soon as practicable in accordance with the terms of this
Agreement:
(i) compensation equal to one year's Base Salary less any
death benefits provided under the Executive benefit
programs. Such compensation shall be paid in six
equal installments beginning within 30 days of the of
Executive's death;
(ii) any death benefits provided under the Executive
benefit programs, plans and practices referred to in
Sections 5.2 and 6.1 hereof, in accordance with their
respective terms;
(iii) the Vacation Payment which shall be paid to Executive
as a cash lump sum within 30 days of such
termination;
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(iv) such other payments under applicable plans or
programs, including but not limited to those referred
to in Section 5.2 hereof, to which Executive's estate
or designated beneficiaries are entitled pursuant to
the terms of such plans or programs;
(v) the health benefit programs referred to in Section
6.1 for the Executive's dependents for a period of
three (3) months after termination in the same manner
as the other senior executive officers of the
Company; and
(vi) the options described in Section 5.3(b) will
immediately vest.
8.4 Non-renewal; Voluntary Termination by Executive; Discharge for
Cause.
(a) Expiration. Except as set forth in Section 5.3(b), in the event
this Agreement expires as a result of either party giving the other an
Non-renewal Notice in the manner described in Section 3, above, Executive shall
be entitled only to such compensation and benefits through the date of such
expiration, and as required by applicable law. Any accrued but unpaid salary and
Vacation Payment will be paid to Executive in a lump sum 30 days after such
expiration.
(b) Voluntary or for Cause. In the event that Executive's employment is
terminated by Company for Cause, as hereinafter defined, or voluntarily by
Executive other than for Good Reason or other than as a result of the
Executive's Permanent Disability or death, prior to the Termination Date,
Executive shall be entitled only to receive, as a cash lump sum within 30 days
of such termination (i) the Vacation Payment; and (ii) earned but unpaid Bonus .
As used herein, the term "Cause" shall be limited to (i) willful malfeasance,
willful misconduct or gross negligence by Executive in connection with his
employment in a matter of material importance to the conduct of the Company's
affairs which has a material adverse affect on the business of the Company, (ii)
continuing refusal by Executive to perform his duties hereunder after notice of
any such refusal to perform such duties or direction was given to Executive by
the CEO or Board of Directors, (iii) any material breach of this Agreement by
Executive or (iv) the conviction of Executive for commission of a felony. For
purposes of this subsection, no act or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Termination of Executive
pursuant to this Section 8.4 shall be made by delivery to Executive of a copy of
a resolution duly adopted by the affirmative vote of a majority of the members
of the Board of Directors called and held for such purpose, finding that in the
good faith business judgment of such Board of Directors, Executive was guilty of
conduct set forth in any of clauses (i) through (iv) above and specifying the
particulars thereof.
8.5. Late Payments. Any amounts due hereunder to Executive which remain
unpaid after their due date, shall bear interest from the due date until paid at
a rate of the prime rate (in effect on the date thereof for First Union Bank,
N.A.). Notwithstanding any provision of this Agreement to the contrary, in the
event any amounts due Executive remain unpaid after their due date, the
Executive shall be entitled to all remedies at law and equity.
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9. RESTRICTIVE COVENANTS.
9.1 Confidentiality. Executive recognizes that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of Company, the use or disclosure of which could cause
Company substantial loss and damages which could not be readily calculated and
for which no remedy at law would be adequate. Accordingly, Executive covenants
and agrees with Company that he will not, either during the term of his
employment hereunder and for a period of six months after the expiration or
termination of this Agreement, disclose, furnish or make accessible to any
person, firm or corporation (except (i) in the ordinary course of business in
performance of Executive's obligations to Company hereunder or (ii) when
required to do so by a court of competent jurisdiction, by any governmental,
administrative or legislative agency having supervisory authority over the
business of Company or (iii) with the prior written consent of Company pursuant
to authority granted by a resolution of the Board of Directors) any confidential
information that Executive has learned or may learn by reason of his association
with Company. As used herein, the term "confidential information" shall include,
without limitation, information not previously disclosed to the public or to the
trade by Company with respect to the business or affairs of Company, including,
without limitation, information relating to business opportunities, customer
lists, price lists, trade secrets, systems, techniques, procedures, methods,
inventions, facilities, financial information, business plans or prospects.
9.2 Non-Competition. During the period of his employment hereunder and
for six months thereafter, Executive agrees that, without the prior written
consent of Company, (A) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder (where Executive is
the beneficial owner of more than one percent (1%) of the voting stock),
partner, investor, lender or Executive or in any other capacity, carry on, be
engaged in or have any financial interest in, any business which is directly in
competition with the business of Company and/or its subsidiaries and (B) he
shall not, on his own behalf or on behalf of any person, firm or company,
directly or indirectly, solicit or offer employment to any person who has been
employed by Company at any time during the 12 months immediately preceding such
solicitation.
10. INJUNCTIVE RELIEF.
Without intending to limit the remedies available to Company, Executive
acknowledges that a breach of the covenants contained in Section 9 of this
Agreement may result in material irreparable injury to Company for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or threat
thereof, Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining Executive from engaging
in activities prohibited by such Section or such other relief as may be required
to specifically enforce any of the covenants in such Section.
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11. ASSIGNMENT.
This contract shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of
Company, but neither this Agreement nor any rights or obligations hereunder
shall be assignable or otherwise subject to hypothecation by Executive (except
by will or by operation of the laws of intestate succession) or by Company,
except that Company may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of Company, if such successor expressly agrees to assume the
obligations of Company hereunder.
12. NOTICES.
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed sufficiently given if delivered in person, or
mailed by certified first class mail, postage prepaid, or sent by a reputable
overnight courier service, addressed to the party to be notified at the
address(es) specified below (or such other address as may be specified by notice
in this manner):
Notice to Company:
Q-Med, Inc.
000 Xxxxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000
Attention: CEO and Board of Directors
Notice to Executive:
Xxxx Xxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Notices shall be deemed given as of the date delivered or the date
entrusted to the United States postal service or courier service.
13. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
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14. HEADINGS.
The headings in this Agreement are for convenience only and in no way
define, limit, or describe the scope or intent of any provision of this
Agreement.
15. WAIVER.
The waiver by either party of noncompliance by the other party of any
term or provision of this Agreement shall not be construed as a waiver of any
other non-compliance.
16. ARBITRATION.
In the event a dispute arises under any term or provision hereof, such
dispute shall be settled by arbitration in the county in the State of New Jersey
selected by the Executive, by and in accordance with the rules then existing of
the American Arbitration Association. The reasonable legal fees of the Executive
in connection with a matter subject to arbitration hereunder shall be paid by
the Company in the event that Executive prevails in such arbitration.
17. SEVERABILITY.
If any one or more of the provisions contained in this Agreement shall
be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions hereof.
18. MITIGATION OF DAMAGES.
Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise after the termination of his employment hereunder.
19. GOVERNING OF LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO ITS CONFLICTS OF LAWS
RULES OR PRINCIPLES.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
QMED, INC.
By: /s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx, Executive Vice President
and COO
EXECUTIVE
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxx Xxxxxxx
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